CNET remains an 'attractive' target - research report

CNET, the web-based media company in California, is "attractive" as a target, Citigroup reported.
Citigroup made the remark in a 29 November research report prepared by Mark Mahaney, Sandeep Aggarwal, and Matthew Reichek. The report ranked CNET stock as "buy" and "speculative."
The report focused on Citigroup's "thesis" on the company stock and provided an update on the bank's long-term thesis on the stock. Among four expectations for CNET is Citigroup's continued view that CNET remains "attractive" as a target, with past M&A deal multiples suggesting that there might be an upside of over 30% off of the current stock valuation.
The report said that Citigroup neither has a "specific acquirer" in mind, nor a timetable for a potential deal.
The report said the traditional media are now confronted with "secular growth" impediments, and thus buying an online content firm like CNET is thus a potentially "logical possibility."
The report said that a 2007 EBITDA multiple of 17 would lead to a take-out at a USD 11.86 take-out price, which is a premium of 40%.
CNET has a USD 1.28bn market cap, the report said.